Cost, cost and cost. UA would love to move on to a new C/D and expand operations but the costs at IAD are very high, without the new C/D even being built.
Cost has been no deterrent to all the international carriers that have started service at IAD in the last few years. If United thinks IAD is expensive, wait till the O'Hare expansion is done.
The high CPE isn’t particularly important for higher yield international O&D, of which IAD generates plenty of traffic, as IAD isn’t competing against any other airport for those passengers.
It is vitally important though for a domestic hub, especially one with relatively low O&D. A passenger flying from BUF to FLL could connect BUF-IAD-FLL or BUF-ATL-FLL, or via EWR, LGA, JFK, PHL, CLT or DCA. United doesn’t have a particularly strong frequent flyer or corporate base in either the upstate or south Florida, so it’s unlikely they can command a premium fare over Delta on this route. Therefore UA will not be able to recover the additional cost of flying through IAD over ATL, where the CPE is a quarter what it is at IAD. Therefore United make less profit carrying the same passenger as Delta. On this basis is it worth even competing for these traffic flows? Smisek said no which is why IAD was drawn down so heavily after the merger, Kirby seems to think IAD is worth keeping but isn’t a huge priority.
A successful hub will either have high O&D (SFO, LAX, ORD, EWR) or very low operating costs (CLT). The best hubs have relatively high O&D and relatively low costs (ATL, DFW). IAD has neither, it is a high cost airport and while it does attract significant international and beyond perimeter O&D, within the perimeter it struggles.
On paper IAD is the perfect East Coast hub; it has oodles of runway capacity and spare gates, plenty of land to grow, significantly better weather than NYC/PHL, it is 2 hours flying time from any point east of the Mississippi, and virtually all north-south traffic passes right overhead. For these reasons you’d think IAD should be as big for United as CLT is for AA, which also has low O&D. That ignores that CPE at CLT is about $20 lower at CLT than IAD. On that fare from BUF to FLL that $20 would probably be the difference between making a profit on that passenger and making a loss.
In other high cost airports like SFO the hub carrier commands significant pricing premium as they have a de facto monopoly on the local frequent flyers and corporates. If those passengers want the most convenient schedules and most non-stop destinations they generally have a choice of one. It is therefore not uncommon to see a flight from a hub to a spoke 500 mi away sell for something like $400-500, whereas a passengers flying spoke-hub-spoke could pay $150. The local passengers are making the profit here, the connecting passengers are providing the volume to keep costs down and the network strong.
In IAD’s case for markets within the perimeter United cannot charge a premium, indeed they may need to charge less than comparable fares at DCA to make people consider IAD. Therefore they are not enjoying he O&D premium which will help offset the high CPE.
This is not to say that IAD is all doom and gloom. If CLT had a CPE even close to $20 it would have been dehubbed yesterday. IAD survives because it does serve a unique and privileged position for transcon and international traffic. Unfortunately though it will never make a great domestic hub.